Zakat on Trade Goods (زكاة عروض التجارة)
Trade goods (عروض التجارة) represent a major category of wealth subject to Zakat. This includes any goods acquired with the intention of reselling them for profit.
The Prophet ﷺ said: "Pay Zakat on your wealth that is prepared for sale." — Reported by Ad-Daraqutni and Al-Bayhaqi
1. Definition of Trade Goods
📌 What Are Trade Goods?
عروض التجارة: Any movable or immovable property acquired with the intention of reselling it for profit.
📋 Examples of Trade Goods
| Category | Examples |
|---|
| Merchandise | Clothing, electronics, food |
| Raw materials | Fabrics, metals, wood |
| Real estate for resale | Apartments, land for resale |
| Vehicles | Cars, trucks for resale |
| Trading stocks | Shares held for trading |
⚠️ What Is NOT Trade Goods
| Item | Reason |
|---|
| Residential home | Personal use |
| Personal car | Personal use |
| Work tools | Means of production |
| Rental properties | For rental income, not resale |
2. Conditions for Commercial Zakat
📋 The 4 Conditions
| # | Condition | Explanation |
|---|
| 1 | Intention of trade (نية التجارة) | At the time of acquisition |
| 2 | Reaching the Nisab | Value ≥ 85g gold or 595g silver |
| 3 | Passing of the Hawl | 1 complete lunar year |
| 4 | Complete ownership | Full ownership of the goods |
📌 Importance of Intention
| School | Timing of Intention |
|---|
| 🟡 Maliki | At acquisition of the goods |
| 🟢 Hanafi | At acquisition |
| 🔵 Shafi'i | At acquisition AND exchange |
| 🟣 Hanbali | At acquisition |
💡 Maliki Position: If someone buys goods without commercial intention, then decides to sell them, they are not considered trade goods. A new Hawl begins only if there is an explicit intention of trade.
3. Calculating Value
📌 Valuation Principles
| Aspect | Maliki Rule |
|---|
| Calculation basis | Selling price (current market value) |
| Currency | Local currency |
| Timing | At the end of the Hawl |
| Condition | Value in current state |
📋 Calculation Method
| Step | Action |
|---|
| 1 | Inventory all trade goods |
| 2 | Evaluate at market selling price |
| 3 | Add commercial cash |
| 4 | Subtract outstanding commercial debts |
| 5 | Verify Nisab is reached |
| 6 | Apply 2.5% rate |
📊 Schools' Positions on Debts
| School | Are debts deducted from the calculation? |
|---|
| 🟡 Maliki | Yes, outstanding debts are deducted |
| 🟢 Hanafi | Yes, all debts |
| 🔵 Shafi'i | No, no deduction |
| 🟣 Hanbali | Yes, debts |
4. Zakat Rate
📌 Quarter of a Tenth (ربع العشر)
| Rate | Fraction | Percentage |
|---|
| ربع العشر | 1/40 | 2.5% |
📋 Calculation Example
| Element | Amount ($) |
|---|
| Merchandise inventory | 50,000 |
| Commercial cash | 10,000 |
| Customer receivables | 5,000 |
| Total commercial assets | 65,000 |
| Less: Supplier debts | - 15,000 |
| Zakat base | 50,000 |
| Zakat due (2.5%) | $1,250 |
5. Companies and Partnerships
📋 Rules for Partners
| Situation | Rule |
|---|
| Partnership | Each partner calculates their share |
| Corporation | Zakat on capital share |
| Stocks | According to intention (investment or trading) |
📌 Calculation for a Partner
| Step | Action |
|---|
| 1 | Determine their share in the company |
| 2 | Apply the percentage to zakatable assets |
| 3 | Verify if their share reaches the Nisab |
| 4 | Calculate 2.5% on their share |
6. Special Cases
📋 Real Estate
| Type | Zakat? | How |
|---|
| Land for resale | ✅ Yes | Market value × 2.5% |
| Apartment for resale | ✅ Yes | Market value × 2.5% |
| Rental property | ❌ No* | No zakat on the property itself |
| Collected rents | ✅ Yes | If saved ≥ Nisab |
*Rental property is not trade goods because the intention is rental income, not resale.
📋 E-Commerce and Digital
| Type | Zakat? | Calculation |
|---|
| E-commerce inventory | ✅ Yes | Market value |
| Digital products | ✅ Yes | Selling price |
| Dropshipping | ✅ Yes | On saved profits |
| Crypto trading | ✅ Yes | Market value |
📋 Liberal Professions
| Type | Zakat? | Explanation |
|---|
| Work tools | ❌ No | Means of production |
| Saved income | ✅ Yes | Treated as currency |
| Inventory (doctor, etc.) | ✅ Yes | If for resale |
7. Managing the Commercial Hawl
📌 Starting Point
| School | Beginning of Hawl |
|---|
| 🟡 Maliki | Acquisition of first commercial capital |
| 🟢 Hanafi | Acquisition of first goods |
| 🔵 Shafi'i | For each item separately |
| 🟣 Hanbali | Same as Maliki |
📌 Stock Renewal
| Situation | Maliki Rule |
|---|
| Selling and repurchasing | Hawl continues (same capital) |
| Change of goods type | Hawl continues |
| Conversion to cash | Hawl continues |
| Total loss of capital | Hawl restarts |
8. Payment of Zakat
📋 Payment Options
| Option | Validity | Preference |
|---|
| In cash | ✅ Valid | Recommended (more useful) |
| In merchandise | ✅ Valid (Maliki) | Possible if useful to the poor |
📌 Maliki Position on Payment in Kind
💡 The Maliki school permits paying Zakat in merchandise if it is more beneficial to the poor, but cash remains preferable in most cases.
🎯 Summary
| Point | Maliki Rule |
|---|
| Definition | Any goods acquired for resale |
| Key condition | Trade intention at acquisition |
| Calculation basis | Market value at selling price |
| Nisab | Equivalent to 85g gold |
| Rate | 2.5% (quarter of a tenth) |
| Debts | Deductible (commercial debts) |
| Hawl | Continuous as long as capital exists |
📚 Sources
- Al-Muwatta by Imam Malik
- Al-Mudawwana by Imam Malik
- Mukhtasar Khalil
- Sunan Ad-Daraqutni
- Al-Sunan Al-Kubra by Al-Bayhaqi
- Bidayat Al-Mujtahid by Ibn Rushd
- Fiqh Az-Zakat by Al-Qaradawi